Judge grants HotJobs injunction in suit vs. Digital City

CBS.MarketWatch.com

FAIRFAX, Va. (CBS.MW) -- In a move with potential consequences for a $100 million agreement between Monster.com and America Online, a Virginia judge ordered AOL's Digital City unit to honor a previously terminated advertising agreement with HotJobs.com.

After inking a $100 million agreement to exclusively feature employment advertising from TMP Worldwide's
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Monster.com unit last fall, AOL moved to terminate an existing advertising agreement with Monster rival HotJobs
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The deal was valued at $540,000 and was slated to run through November 2000. HotJobs responded with a lawsuit in circuit court alleging breach of contract.

The company also sought a temporary and permanent injunction to force AOL
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to honor the ad agreement and prevent Digital City from making exclusive agreements with HotJobs' competitors.

In granting the injunction, Judge R. Terrence Ney ordered Digital City to honor the advertising agreement with HotJobs until the case is decided.

"We believe our actions were justified, and we intend to appeal the decision," said AOL spokesman James Whitney.

In the case, AOL argued that its agreement with HotJobs gave it the right to cancel the entire agreement on 30 days notice for any reason. But Ney agreed with HotJobs' assertion that the contract language specified only that AOL could "cancel and remove" a particular advertisement.

Ney drew a distinction between that language and other provisions of the contract, which gave AOL the right to "terminate the agreement" for nonpayment, insolvency and other conditions which don't apply to its decision to end its relationship with HotJobs.

"The contract appears unambiguous," Ney wrote. "Where the parties have used the phrase 'terminate the agreement' to refer to a complete cessation of the business relationship, it defies logic to accept the assertion that 'cancel and remove ... any advertisement' also refers to a complete cessation of the business relationship."

The case has yet to go to trial. Ney wrote that he granted the injunction on the grounds that "HotJobs appears very likely to prove that (Digital City) breached the contract."

In ordering injunctive relief, a judge must weigh several factors, including the potential for the order to cause irreparable harm to either the plaintiff or the defendant. Ney said AOL may find itself in breach of its exclusive agreement with Monster, but argued that "such an injury would flow from (Digital City's) own wrongdoing, and, therefore, Digital City can hardly complain that it will suffer irreparable injury ... because it brought the harm on itself."

A TMP Worldwide spokeswoman said the company had no comment on the court order and that the ruling wouldn't have any affect on the continued rollout of Monster.com's services on AOL.

"As far as we're concerned, this is an AOL-HotJobs issue," she said.

Shares of AOL rose 6 5/8 Thursday, or 12 percent, to close at 61 1/2. HotJobs gained 4 9/16, or 17 percent, to close at 32 while TMP Worldwide rose 7/8 to 92 3/8.

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